ARGUMENT
I. THE MOTIONS FOR JUDGMENT OF ACQUITTAL, OR THE MOTION TO VACATE, MADE IMMEDIATELY FOLLOWING THE TRIAL, SHOULD HAVE BEEN GRANTED.
At trial, the government’s theory of the case was that investors were promised only nonexistent “prime bank” programs as displayed in GX-1*, upon which the “ponzi scheme investment fraud” was predicated (Schipper at TR 41-43, 3196; Gezon at TR 747, 3714-15), as substantiated by the “overwhelming evidence” of GX-1, a “prime bank” booklet, and Agent Flink’s summary exhibits showing a “ponzi scheme” solely because he refused to include any non-prime bank investments in his exhibits (Flink at TR 2052).
The first mail fraud count was dated 10/21/99. A 6/99, investor newsletter (GX-31), provided notice that their investments were being held at Suisse Security Bank & Trust (hereafter referred to as “SSBT”). In 10/99, a newsletter provided notice of the main investments, the Bahamas CD Program (GX-2/GX-3), described as a certificate of deposit collateralized to purchase stocks (GX-33). The prosecution team removed the Bahamas CD flyer from this newsletter before
* Government trial exhibits referenced as “GX”
submitting it as evidence. GX-1 was not competent or substantial
evidence to support summary exhibits or the charges. While the investor newsletters were also entered into evidence by the
prosecution, other than to occasionally misconstrue their content by taking excerpts out of context, the jury was not directed to view them (Example: TR 3235-36).
Another main stock investment, the MLC Branson Project, was first noticed to investors in a newsletter (GX-41, p. 8), and later described as the “centerpiece” of the 5/01 investor seminar by AUSA Gezon in a filing after the trial (R. 501-1, p. 10). At trial, however, Agent Flink testified that MLC was not an “obvious” investment (Flink at TR 2058), and AUSA Gezon misrepresents it to the jury as something which was not done until 2002 (TR 3721). The Appellee persists in misrepresenting the MLC Branson Project as a venture which was not begun or promoted until after “Marcusse left Michigan” in “2002” (AB-p. 83), however, AUSA Gezon’s 10/5/05 response to defendant Wesley Boss’s objections to the PSR states,
“The government notes that the defendant was fully aware of the upcoming Branson Project and knew it was being represented as the next phase of Access’ alleged highly successful business. The project was the centerpiece of the May [2001] seminar and was mentioned in newsletters” (R. 501-1, p.10). This filing had earlier indicated, Wesley Boss “no longer was a sales manager in April or May of 2001” (R. 501-1, p.4).
The government alleged in the indictment there were approximately 577 investors involved in this case. The 12/5/03 Criminal Complaint attested that “approximately 150 investors returned surveys” (R.2, p.2). In spite of this input and after 3-1/2 years of investigation, the prosecution team was only able to find 6 out of the 28 total investors that appeared as government witnesses who could testify they “recognized” GX-1, whereas several investors testified they had never seen it before (Exh. A). Even the Appellee Brief contains no investor testimony directly referencing GX-1 (AB-p. 15, 26-27). Investor Sharpe who is mentioned next to the reference to GX-1, at two separate points in his testimony, confirmed that he did not recognize GX-1 (TR 462, 481), thereby contradicting the Appellee Brief representations that the Bahamas CD Program was a “prime bank” program (AB-p.14; R.688: 1-4). Sharpe does testify that GX-2, the Bahamas CD Program, was the program he recognized and went on to describe (TR 462-63).
In essence, the evidence and testimony at trial by the prosecution team, were it to be accurately portrayed, established that NO INVESTORS could be located that believed GX-1, a “prime bank instrument”, to be the only type of investment offered on their behalf (Exh. A).
Thus, GX-1 was immaterial to any criminal charges other than to prove the accused were innocent of “prime bank” fraud.
Exhibit A establishes that of the few investors that saw GX-1, it was likely around the time $400,000 was invested in a small diversification called “Valley Boyz”. These funds were seized by the government in 5/99 and returned to the accused (AUSA Pixler at TR 769-71) as AUSA Gezon confirmed “that’s money that the defendants lost, and they didn’t make any -- there wasn’t any profitable high yield investment program.” (Gezon at TR 749).
Obviously no profits were obtained, but the mere act of returning principal to the investors in this matter, was charged as a monthly “profit” check in Count 40, Item 1, m and n (R. 323, p.10), yet AUSA Pixler, flown in from the Phoenix office (TR 633), testified the government determined the accused to be the “innocent victim” of “prime bank fraud” in a 5/15/00 contract regarding it (GX-380). AUSA Gezon used this contract to attest that the accused had “notice” that “prime bank instruments” were a crime (TR 3532). Hence, the reason that Richard Gerry and his advisor, Government Attorney James Kramer-Wilt, were added as investment advisors to the group shortly thereafter.
All 6 investors who saw GX-1 did so before the “notice” included in GX-380, and Exhibit A even establishes they all saw GX-1 before 10/21/99, the date of the first mail fraud count (R.323). The 10/99 newsletter disclosing the SSBT Bahamas investment was in “stocks” (GX-33, p. 2), also stated, “We have been in the new program since late last year” (GX-33, p.1; Moore at TR 1675); and, “This program is not considered to be a standard bank debenture program” (GX-33, p.2), so the few investors who may have seen GX-1 thereby had notice that it was no longer valid as part of the current investment program.
It is further an irrefutable fact that the prosecution tampered with this main evidence at trial in order to create the probable cause to pursue the allegation that the accused were only “pitching” a “prime bank” type of program. The prosecution combined two inherently different investment products together, by taking the “flagship” one of stocks, the Bahamas CD Program (GX-33, p.2; Marcusse at TR 3040, 3043-44), from SSBT, the offshore bank recommended in writing by Agent Forrester (R.392-2, pgs. 15-18), and combining its features with that of GX-1, the “prime bank” program, a contradiction in terms, but which were nevertheless described in the indictment as a single “high yield” product (R.323, Items 11, 12, 13, 18, pgs.3-5). The prosecution removed the attached flyer (GX-2/GX-3) from the stock program described in the 10/99 investor newsletter (GX-33), and placed it with the “prime bank” booklet (GX-1), beginning with the 12/5/03 Criminal Complaint (R.2), used to obtain the indictment from the grand jury. A civil litigation case filed on 7/9/03 in the same court, prior to the instant case, proves this evidence tampering fraud occurred (Exh. B -- Case No. 1:03-cv-00454-RAE, Item 34, Document 1, p.4, Exhibit A, Document 1-2, pgs.1-7,). Exhibit A to the 2003 civil litigation case contains the entire 10/99 newsletter including its attachments. The accused informed the prosecution of this inaccuracy early on, yet this vital point was ignored to steamroll the case forward.
It was first brought to the prosecution’s attention on the record almost a full year prior to trial at the detention hearings by Marcusse’s cross-examination of their “expert” witness (Zawistowski at TR 95-96, 7/28/04). Detention exhibit GX #2 (GX-1 at trial) was objected to by Marcusse at this hearing for its irrelevancy to any fraud (TR 19, 7/28/04), but she was not permitted to object to any evidence at trial (Court at TR 31). FBI Agent Moore, who brought forth the initial “prime bank” Criminal Complaint (R.2, Affidavit, Item 8), admits at trial that there is no prime bank program that contains stocks (Moore at TR 1674-75). Moore had a background as a securities broker for six years prior to joining the FBI (R.2, Affidavit, Item 3) and concedes this fact only after Marcusse has him read from the 10/99 newsletter that, “We are instead in what is termed a stock trading program” (Moore at TR 1674). IRS Agent Flink further admits that, “it’s possible that one can trade stocks with collateral as a certificate of deposit”, identical to the investor program described in GX-33 (Flink at TR 2072-73). Expert government witness Leonard Zawistowski concedes that prime bank debentures are not stocks, but “debt instruments” (TR 804). The prosecution’s response to this fundamental flaw in their case was to relentlessly pursue the accusations through closing arguments (Gezon at TR 3532), and rebuttal closing arguments where AUSA Gezon tells the jury to “look” at the “believable evidence” of “Exhibit 1”, right after he asks them to consider whether the accused “made deliberate lies” (Gezon at TR 3714). The prosecution’s accusations were thus substantially aided not only by misleading the jury, but by the fact that it was functionally impossible for the accused to have “performed” what the prosecution alleged they “promised” on a product which was created after the fact.
The SSBT Bahamas CD program continues to be misrepresented as a “prime bank” fraud upon appeal, along with the trial testimony of investor John Beemer (AB-p.14-15, 27). GX-33, the 10/99 newsletter to which the investment flyer (GX-2/GX-3) had been attached, discloses “the program has a profit pool”, which is “based on movements in the market, either up or down. The profit pool earnings are not guaranteed returns in that they may be higher or lower” (GX-33, p.2). Government witness investor John Beemer confirms the Bahamas CD Program “had to do with the stock market” and the “profit pool was going to be based on the profit at the end” (TR 349).
Another reason the government’s theory of the case was knowingly false is that all investors signed contract agreements and received deposit receipts, entered into evidence, that included clauses for acknowledgements of “best efforts” only, no guarantees of profits, diversification, commissions, that funds would be liquid only in the event of a prior investment cashing out, arbitration, that the group would not be held responsible in the event of circumstances beyond their control, otherwise known as a “force majeure” clause. Further, a conveyance of discretionary control to the accused was made over the choice of investments, and the descriptions of the investments as “Private Placements” and as “Venture Capital Programs”, denoted the existence of risk, equity or stock positions in companies, as well as the tax ramifications (Kaczor at TR 3592-95; Def. Exh. M-L; GX-69f; GX-63c; See Exh. E-3, E-4, E-5; Exh. B, Doc. 1-3, p.4). Item 12 in the indictment alleged that “investor could choose to leave the program at any time and their principal would be returned in full” (R.323, p.4). This was not true as established by these contracts. Even the investment product sheet on the Bahamas CD stock program (GX-2/ GX-3) clearly states, “Contracts are for one year. Individual investor may renew at anniversary date under mutual consent”, as further confirmed by GX-33, p.4. It also mentions the “compounding” of returns several times. The prosecution seized upon the fact that because wire transfers were not made from offshore, this was somehow “proof” of a ponzi because no profits were deposited in the accounts they selected to show the jury. This flyer demonstrates that in order for the accused to do what was represented to investors, i.e., “compound” their returns, they had to leave the funds offshore. That Agent Corcoran did not include any “related” offshore investment accounts in his investigation or the IRS’s summary exhibits, suggests that this was purposefully omitted to support the prosecution’s insidious claims (Corcoran at TR 2292-93).
Agent Flink makes the excuse that they were “not able to get any information from the Bahamas” (Flink at TR 1982-83). He further insists, “if it’s not drug money, then they will not cooperate with us” (Flink at TR 1983). This was not true about the Bahamas or the United Kingdom as of 3/10/01 (R.422-3, pgs.27-30, Refer also to U.S. Attorney’s Bulletin, July, 2001, p.43-44. In USA v. Horton, Case No. 1:06-cr-87 in the same court, the FBI was able to obtain a “Seizure Warrant” for $1 million in funds in a non-drug case from Hong Kong (Exh. C).
The unexpected revocation of the banking license causing the failure of Suisse Security Bank on 4/2/01 certainly fits under the category of “force majeure”. There is also the issue that an agreement to arbitration is irrevocable and enforceable as a remedy under Title 9, U.S.C. §2.
The investor contract was misrepresented and submitted at trial as being within GX-1, however, at the detention hearing, it had been a separate exhibit (Flink at TR 2042), indicating the investor contract had been a stand-alone document, and as confirmed by investor Sharpe (TR 486).
Closing arguments for Marcusse asked the jury to concentrate on the main offense charged, “What is this trial about? Please, I ask you to stay focused on this. What is this trial about? This trial is about whether or not Mrs. Marcusse operated a Ponzi scheme” (Kaczor at TR 3584). He defines it in the prosecution’s own terms, “Foundation of a Ponzi scheme, it’s a lie, it’s a scheme. It’s based upon the fact that there is no investment” (Kaczor at TR 3591). Counsel centered his argument on the numerous legitimate investments made invoking clear reasonable doubt and going over the investor contracts in detail.
In rebuttal closing, AUSA Gezon in effect dismisses the “ponzi scheme” charge by telling the jury, “you will not see the words Ponzi scheme in any of the elements that you have to consider in these crimes” (Gezon at TR 3713). This last minute reversal shows the prosecutor abandoned his main basis and theme for the mail fraud charges, substituting a tax offense instead, however, the Appellee Brief seeks to act as if this never occurred and resubmits the “ponzi scheme” charge (AB-p.5)